The Big Mistake

by JDH on April 28, 2012

As I write this post on Saturday morning, the memory of last night’s Blue Jays baseball game is fresh in my mind. With two out in the top of the ninth, Blue Jays in the lead, a routine ground ball was hit to the Blue Jay’s star rookie third baseman, Brett Lawrie, (the only Canadian born player on the team) who threw wildly to first. An error. Runner safe. Ballgame not over.

The Seattle Mariners tied the game in the top of the ninth, and with the game tied in the top of the tenth, Seattle loaded the bases, and up came Michael Saunders (the only Canadian on Seattle’s team), and he hit a Grand Slam, Seattle’s up 9 to 5, Blue Jays don’t score in the bottom of the tenth, and that’s the ballgame.

Brett Lawrie’s error, the Big Mistake, cost his team the game.

If I was the manager, what would I be telling Brett Lawrie today? I’d tell him to keep playing the game hard; don’t pull back, don’t be tentative. We all make mistakes, but if you focus too much on the errors, you’ll forget about all of the great plays.

The “experts” are espousing the view that gold has already peaked, and according to some guy named Yoni Jacobs it could be heading to $700 an ounce. Apparently gold is in a bubble, and with economic slow down people will buy less gold, and that will be that.

Personally, I think expecting a crash would be a big mistake. Yes, gold is volatile, and will likely have many down days, but the bullish case for gold has not changed. Massive money printing eventually causes inflation. In a depressed economy with high unemployment it’s unlikely we will be seeing inflation in the very short term. That doesn’t mean it won’t happen. It will. It has to; that’s just the way it is.

Buying gold at $1,900 and then seeing it drop to $1,600 is an error. You bought high, and lost the game, but that does not mean the season is over and we should all go home. We keep playing. We average down. We continue.

Nice run up this week, eh? Will it last? I don’t know, but it’s worth riding it, and continuing to average down on further weakness. This stock pays a dividend of around 2% at current levels, so as a long term hold it’s a good deal.

And so, to avoid the Big Mistake of believing the world is fixed and the bull market in gold is over, I will continue to hold and average down, and I assume I will look back on this five years from now and realize it was a great buying opportunity.